This document discusses strategic performance measurement systems and four related papers. The introduction defines strategic performance measurement and explains its importance for aligning organizations with long-term goals. Four papers are then summarized that examine: 1) How performance measurement can play an active role in strategy reviews, 2) Using non-financial indicators to improve strategic alignment and learning, 3) How flexible performance systems can effectively implement strategic changes, and 4) How non-financial indicators can create organizational rigidity if overused. The discussion analyzes themes across the papers regarding the multiple roles of performance measurement in implementing, reforming and communicating strategy. It emphasizes defining the intended roles and characteristics of a performance system upfront to ensure consistency with organizational aims.

1. Presented by
Faiza Majid- 1221132
Maria Shahid- 1221138
SZABIST ISLAMABAD

2. Introduction:
- Strategic Performance Measurement System (SPMS)?
• SPM is a system that focuses the company on those goals and activities that
will make a difference down the road.
• SPMS is important in formulating strategy , implementing it and reformulating
it (if needed).
• SPMS compensate each and every department and individual in
organization.
• PMS is a tool or a technique to measure performance.

3. Introduction Cont.
Strategic performance
measurement
Functional
Asset
+ive impact on organization
performance
dysfunctional
Liability
-ive impact on organization
performance

4. If organizations are to realize value and become
more sustainable, it is crucial to understand how
appropriate SPM practices deliver improved
performance

5. Article Methodology
• The call for papers attracted 77 extended abstracts; related to
strategy, management accounting and control, and operations.
• Following the review of the abstracts then asked for 25 full
papers. Of these, eight were subsequently selected.
• These 25 articles Presented in a workshop organized at
IMD, Lausanne on 24/25 January 2008. After a further three
rounds of review, four papers were selected for publication.

6. Paper 1:
Are performance measurement systems mere tools to implement
strategy, or could they play an active role also in strategy
reviews?
SPMS 4 attributes by Gimbert, Bisbe and Mendoza
1. Integration of long term strategy & operational goals.
2. Presence of multi perspective indicators.
3. Inclusion of cause effect linkages.
4. Presence of sequence of goals-target-action plans.

7. Paper 2:
Through an enhanced use of non-financial
indicators, SPMSs could contribute more effectively to
strategic alignment and organizational
learning
• Establishment of dialogue between headquarter and subsidiary is
important for long term success.
• Non financial indicator is positively associated subsidiary profitability

8. Paper 3:
Systems which combine alignment
and empowerment, and make appropriate use of performance
targets and indicators over time, could prove an effective means
of implementing changes in strategy and promoting intended
behaviors.
• flexible SPM system for companies operating in dynamic environment.
• high empowerment with high alignment is useful in such environment.

9. Paper 4:
Non financial indicators are always welcome while
measuring performance but they also build rigidity in the
culture which restrict organizations to move on.
CASE STUDY discussed :
“Large Multinational Home supplies Firm”

10. Discussion
• Comparability and generalizability of research findings
• The „diagnostic and interactive‟ use of SPMS
• Authors of the selected papers considered SPM as a means to:
• implement and reformulate strategy;
• communicate key objectives and corporate priorities;
• provide strategic alignment; support process improvement; and
• encourage incremental innovation.
• Previous studies have looked at other roles of SPM, such as:
• promoting specific behaviors and attitudes at different organizational levels;
• responding to rules and regulations;
• providing greater accountability within and between organizations;
• communicating financial and non-financial results to key stakeholders,

11. The different roles of SPM
• SPM can be used to gather data about past
performance, but also to implement strategic objectives.
• Headquarters seeking dialogue with local managers

12. SPMS: static systems for dynamic
environments?
• Criticism:
SPM can create ‟ossification‟
• When an SPMS is reviewed and redesigned to support a
change in strategy, it can push the organization in a
direction opposite to the one intended

13. SPMS: A powerful tool or a tool for
power?
• For performance measurement to be used as an effective
‟tool for power‟, it is important that performance indicators
are linked with strategy

14. Conclusion
The plurality of roles of SPM indicates the importance of
defining from
the outset the roles of every performance indicator and
the SPMS as a whole.

15. Key questions managers should ask
themselves
• Why is the organization introducing (or reviewing) an SPMS?
• Which roles do we want it to play?
• Will its characteristics be consistent with its aims?

17. Introduction
• Performance
measurement
has become important for nonprofit
organizations due to competition , all competing for scarce
donor, foundation, and government funding.
• Financial considerations can play an constraining role but will rarely be
the primary objective.
• Profit companies have recently recognized that financial measurements
are inadequate for measuring and managing performance.
• Financial reports measure past performance but communicate little about
long-term value creation.
• Kaplan and Norton (1992, 1996) introduced a new performance
management system called the Balanced Scorecard.

18. Cont‟d
• This system retained financial measurements but complemented these
with measures from three other perspectives: customer, internal
process and learning and growth.
• Its initial focus and application was the profit (private) sector. But the
opportunity was to improve the management of nonprofits.
• In this article the results from a multiyear action research program to
apply the Balanced Scorecard to several nonprofit organizations has
been discussed.

19. Literature review
• The subject of performance measurement for nonprofit organizations is
extensive but generally inconclusive (Forbes, 1998).
• Herzlinger (1996) argues that nonprofit organizations should disclose
nonfinancial quantitative measures of services but does not offer guidance of
measures.
• Kanter and Summers (1987) reinforce the importance of reflecting the
outcomes for multiple constituencies and the need to have both long-term
measures (outcomes) and short-term measures (processes and activities
performed).

20. Cont‟d
• Balanced approach would provide the data to help the organization
know whether it is „ doing well‟ on any of the dimensions of
performance with which an active constituency might be concerned.
• Sheehan (1996) revealed that the organization had an impact on its
mission. In effect, the organizations has no way to distinguish whether
their strategy was succeeding or failing.
• The gap between mission and measures eventually led to the
adoption of a much more balanced set of measures, better linked to its
organizational mission.

21. The Balanced Scorecard

22. Research method
• The research agenda on the applicability of the Balanced Scorecard to
the non profit sector was launched in 1996.
• The program conducted a survey and learned that executives and
board members of nonprofits consistently rated performance
measurement as one of their top three management concerns.
• Several
nonprofit organizations in 1996 had multidimensional
measurement systems, derived their measures from strategy and
mission or organized their measures using the multiple Balanced
Scorecard perspectives.

23. Thank you !